NYSE Up Volume Ratio

Smart Money Confidence is a model that aggregates indicators reflecting sentiment among investors that tend to use the stock market to hedge underlying positions. Or, they're just contrarian investors who prefer to sell into a rising market and buy into a declining one.

Time Frame: Medium-Term | Update Schedule: Daily | Source: NYSE

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Construction:

This is a breadth ratio expressed as the amount of volume traded in issues that closed up on the day on the New York Stock Exchange (we also present one for the Nasdaq) as a percentage of total up and down volume.

For example, on any given day, if there were 1.50 billion shares traded in issues which closed higher and 300 million shares traded in issues which closed lower, then the up volume percentage would be:

1,500,000,000 / (1,500,000,000 + 300,000,000) = 1,500,000,000 / 1,800,000,000 = 83%

This calculation ignores issues which ended unchanged on the day. It can gyrate wildly day-to-day, so it's often useful to plot a moving average, such as a 10-day.

Overbought/oversold indicators such as this one are most effective when giving contra-trend signals. When we are in a clear long-term downtrend and this indicator becomes overbought, then it is an effective sell signal. Conversely, if we are in a sustained uptrend and the indicator becomes oversold, then it suggests that an upside reversal may be forthcoming.

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